StarHub Limited, Singapore’s telecommunications service provider, has reported mixed results for FY25, with earnings declining significantly despite meeting revenue expectations. The company operates across mobile, broadband, and cybersecurity services, maintaining its position as a key player in Singapore’s competitive telecommunications market.
Financial Performance Overview
StarHub’s FY25 results came in largely within analyst expectations, with revenue reaching 102% of forecasts and EBITDA achieving 97% of projections. However, the company experienced a substantial 29% year-on-year decline in adjusted PATMI to S$100.5 million. Looking ahead, management has guided for a further 15-20% year-on-year decline in FY26 EBITDA, signalling continued challenges in the operating environment.
The Positive: Dividend Commitment
Despite the earnings decline, StarHub has demonstrated its commitment to shareholder returns by maintaining its dividend policy. The company met expectations by delivering at least 6 cents in FY25 dividends and has pledged to maintain this level for FY26, resulting in a payout ratio exceeding 100%. To support this dividend commitment, the company drew on its balance sheet, achieving a 103% payout ratio. Free cash flow, excluding S$188 million for spectrum costs and S$29 million in leases, reached S$134 million, providing some foundation for the dividend policy.
The Negative: Mobile Revenue Pressures
The company’s mobile segment continues to face significant headwinds, with mobile revenue contracting 10% year-on-year to S$129.5 million in the fourth quarter of FY25. This decline reflects the intense competitive pressure in Singapore’s telecommunications market, where aggressive pricing by competitors in the value segment has created ongoing revenue challenges. Despite some stabilisation in the pace of decline on a quarter-on-quarter basis, with Average Revenue Per User (ARPU) remaining stable at S$22, competitive pressures persist through promotional offers and free-month deals.
Transformation Challenges and Outlook
StarHub’s Dare+ transformation initiative, launched in 2022 to reduce costs and improve technology capabilities, has not delivered the anticipated S$280 million in cumulative cost savings. Fixed costs have increased since 2022, prompting the launch of a new Dare++ programme targeting S$70 million in identified cost savings, though this will require higher capital expenditure. Phillip Securities Research has lowered its FY26 EBITDA forecast by 8% to S$377 million and maintains a NEUTRAL recommendation with a reduced target price of S$1.01, down from the previous S$1.05.
Frequently Asked Questions
Q: What were StarHub’s key financial results for FY25?
A: StarHub’s FY25 results were within expectations, with revenue at 102% and EBITDA at 97% of forecasts. However, adjusted PATMI declined 29% year-on-year to S$100.5 million.
Q: What is StarHub’s dividend policy for FY26?
A: StarHub is maintaining at least 6 cents dividend for FY26, representing a payout ratio exceeding 100%, despite the earnings decline.
Q: How is StarHub’s mobile business performing?
A: Mobile revenue declined 10% year-on-year to S$129 million in 4Q25, with ARPU remaining stable at S$22. Competitive pressures from value segment pricing continue to impact performance.
Q: What is the Dare++ transformation programme?
A: Dare++ is StarHub’s new transformation initiative following the previous Dare+ programme. It targets S$70 million in identified cost savings but will require higher capital expenditure.
Q: What is Phillip Securities Research’s recommendation on StarHub?
A: Phillip Securities Research maintains a NEUTRAL recommendation with a target price of S$1.01, reduced from the previous S$1.05.
Q: What are the key challenges facing StarHub?
A: The main challenges include intense competition in the mobile segment, lack of effective cost control, and negative operating leverage pressuring margins, with CAPEX-to-sales expected to at least double in FY26.
Q: What is StarHub’s FY26 guidance?
A: StarHub is guiding for a 15-20% year-on-year decline in FY26 EBITDA, indicating continued operational challenges ahead.
This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.
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